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SapuraKencana Petroleum reported a 76.7 percent decline in 2Q15 net profit to RM104.1 million, impacted by a RM540 million provision for impairment on its oil and gas properties amidst lower oil prices.

Excluding the provision, the group would have recorded a pre-tax profit of RM601 million. 2Q15 revenue inched up 4 percent to RM2.8 billion, attributable to new projects executed in the engineering and construction segment and additional contribution from new rigs.

An analyst noted that the provision for impairment on assets was a paper loss and the firm will record extraordinary gain at a later period, if markets improve and oil prices rise.

Significance: Despite the longer-than-expected headwinds of weaker oil price, SapuraKencana’s robust order book of RM23 billion to date provides certainty in revenue over the next few years. Going forward, the firm will execute a targeted approach on key geographies and customers to replenish its order book.

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